During this five-day program, participants will learn, in a practical and realistic manner, how to analyze the economic performance of upstream oil and gas investments from both project and corporate evaluation perspectives. They will be asked to build economic models for typical oil and gas projects and then identify and incorporate all major risks into the analysis. A major part of the learning is achieved through team participation in a challenging business game where they must present their team’s field development recommendations to management.
The instructional format consists of lectures by a respected specialist and team participation in a classic IHRDC business game. The business game typically takes almost one half of the instruction time and is highly rated for its effectiveness in internalizing learning and generating discussion among team participants. In addition to the lectures and business game, this course will utilize additional exercises and case studies to further enrich the classroom experience. This method of blended learning has proven to be an ideal way for participants to learn the practical needs of today‘s international energy markets.
| Program Type |
|---|
This program is designed specifically for government officials, regulators, energy project managers, supervisors, and key employees from broad functional areas, such as finance, technology, and project development, who wish to expand their knowledge of upstream project modeling and cost optimization, with a focus on financial modeling and petroleum project economics.
The instructional format consists of lectures by a respected specialist and team participation in a classic IHRDC business game. The business game typically takes almost half of the instruction time and is highly rated for its effectiveness in internalizing learning and generating discussion among team participants. In addition to the lectures and the interactive business game, this course will utilize additional exercises and case studies to further enrich the classroom experience. This method of blended learning has proven to be an ideal way for participants to learn about the practical needs of the international energy markets.
The physical properties of hydrocarbons, measurement methodologies, and a common set of conversion factors used in the energy industry. The principal constituents of petroleum and natural gas. Fuels and lubricants, as well as raw materials to produce petrochemicals and industrial chemicals.
Overview of the oil & gas value chain components; pricing of crude oil, natural gas, and coal. Review of global resource availability. Regional oil and gas reserves in key world markets; analysis of market opportunities; major pricing formulations. Industry trends and recent developments.
Typical host-country exploration agreements: a summary of the history and key provisions, including bonus payments, royalties, taxes, production sharing, and participation arrangements.
Oil and Gas exploration methodologies and processes. Fundamental techniques and concepts in calculating the unit cost of supply.
The fundamentals of upstream project economics: background and its application to the oil and gas upstream project development analysis.
Project cash flow analysis, discounting cash flow to obtain present value and internal rate of return, the cost of capital, the effect of debt financing, and other measures of project performance. Sensitivity to changes in key variables.
Formation evaluation; estimating reserves; field development planning; inflow performance; surface production facilities design for both onshore and offshore operations; integrated reservoir management and enhanced recovery projects.
“True costs” of developing and delivering products and services; Using gross profit analysis, activity/based costing techniques, and cost variance schedules. Methodologies used in forecasting commodity prices.
Definition of various industry terms; classification of reserves and resources; introduction of two major accounting options to account for oil and gas costs: successful efforts and full cost; IFRS guidelines; GAAP filing and valuation methods to comply with SEC filing requirements, including asset impairment and asset retirement obligations.
Corporate and project financing; sources of debt and equity financing; public and private sources of capital; multilateral and bilateral sources of financing; risk assessment and mitigation; structuring of financing; preparing the financing plan; negotiating the term sheet; preparing the financing documents; closing and case studies.
Background needed to understand and build models of the four key corporate financial statements; review and discussion of key measures of financial performance; consideration of the measures used by major companies and of participants’ companies; steps required to build pro-forma financial projections.
Reviewing a major oil and gas company’s annual report. The process requires cross-referencing financial performance, oil and gas market pricing, reserve estimates, and ESG mandates. A rigorous review of operational realities, disclosed financial results, and projected strategy.
Effective modeling and review of upstream and midstream projects, informed by commercial arrangements and financial analysis. Review of fiscal terms (production sharing or concessions). Midstream value chain analyses based on pipeline capacity, utilization rates, and long-term transportation & processing contracts.
This business game is an integral part of the learning process. Participants, working in teams, will evaluate an oil and gas business opportunity in the Republic of Oceana, near Indonesia. They build a financial model that will integrate various risks associated with the investment. This model will utilize a proposed Production Sharing Agreement and incorporate revenue, capital and operating costs, financing costs, and tax projections for the life of the project. Throughout the program, teams will add layers of complexity to the model by incorporating different risk analysis tools presented in the lectures. The teams will present their project analysis to a decision review board by outlining the risk profile and expected performance measures of the project. They then learn the outcome of those decisions. Emphasis will be placed on the practical implementation of the tools presented and on developing practical financial modeling skills.
